U.S. import prices post largest drop in over five years

(C) Reuters. Outbreak of the coronavirus disease (COVID-19) in New Jersey

WASHINGTON (Reuters) – U.S. import prices fell by the most in more than five years in April as the coronavirus crisis depressed demand for petroleum products, which could strengthen some economists’ predictions of a brief period of deflation.

The Labor Department said on Thursday import prices dropped 2.6% last month, the largest decline since January 2015, after a revised 2.4% decline in March.

Import prices, which exclude tariffs, were previously reported to have decreased 2.3% in March.

Economists polled by Reuters had seen import prices plunging 3.1% in April. In the 12 months through April, import prices tumbled 6.8%. That was the largest decrease since December 2015 and followed a 4.2% decline in March.

The report followed data this week showing the biggest drop in the consumer price index since the Great Recession in April. Producer prices fell by the most since 2009 last month.

Lockdowns to slow the spread of COVID-19, the respiratory illness caused by the virus, have weighed on domestic and global demand. That has raised the specter of deflation, a decline in the general price level, which is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices, worsening the economic downturn.